2013-03-27 20:50 (UTC)
XE Market Analysis
The dollar was mixed to higher in N.Y. trade on Wednesday, largely as risk appetite faded again on ongoing EU and Cyprus concerns. Equities fell, as did commodities, helping EUR-USD to fall to new trend lows near 1.2750. The U.S. calendar was light with just February pending home sales data, which was a bit light of expectations. Economics pick up some on Thursday though, as weekly jobless claims, the third revision to Q4 GDP, and the March Chicago ISM index are all on tap. Elsewhere, USD-JPY was heavy on the back of soft risk taking levels, while cable hugged the 1.5100 level until later in the day, when short covering gave the pound a modest lift. The CAD was firmer on hotter Canadian CPI data, though AUD softened from weaker commodities.[EUR, USD]
Early N.Y. desks were sellers of EUR-USD, helping the pairing move to fresh lows near 1.2750. Some short covering from the Continent reportedly returned, though reloading of shorts will likely continue on bounces toward 1.2800. Near term downside target is trend-line support at 1.2725. EUR-USD did not bounce in the slightest through the morning session, though the 1.2725 level should provide interim support, while bids are seen lined up down to 1.2700. Under the figure however, larger stops are said to be lurking. Cyprus will continue to weigh on the euro, as after Greece and Cyprus it is clear that officials intend to shift the burden of future bailouts away from tax payers to depositors and investors. Burden sharing will be reduced and will once again undermine confidence in the eurozone.[USD, JPY]
USD-JPY consolidated lower after making a two-day high, testing the 20-day moving average at 94.81 before retreating to around 94.60 in London. Reports of repatriation flows to Japan, ahead of the fast approaching fiscal year-end (March 31st), had been widespread over the last week or two (and saw USD-JPY low three-week lows), but seem to have dried up now. U.S. trade saw USD-JPY continue to move lower, briefly testing 94.00, as risk appetite was reduced. The pairing regained some poise as Wall Street came off its worst levels, settling in around 94.50.[GBP, USD]
GBP-USD continued to bump along the bottom, finding support just under 1.5100. Dealers note Mideast buying interest, though there is some risk of sell stops being tripped from 1.5080. Without a break lower though, short covering became a factor into the London close. Bigger picture, the pair looks to have entered a broad consolidation phase after hitting major trend lows toward 1.4800 earlier in the month. The BoE's recent verbal interventions and expectations for a gradual improvement in the U.K. economy through 2013 have settled bearish appetite. Good demand can be expected into 1.5000. Sterling's has, meanwhile, been rising against the euro. EUR-GBP hit a six-week low today of 0.8449 and has broken both the 20- and 50-day moving averages in recent sessions. The Feb-2 low of 0.8444 marks support, while 0.8500, having proved to be a pivotal level recently, marks resistance.[USD, CHF]
USD-CHF rose over 0.5%, rising above 0.9500, as the dollar finds safe-haven support amid ongoing concerns about Cyprus and a weak Italian auction. Trend projections provide targets to 0.9570 and 0.9600. Support is marked at 0.9500 and 0.9480. Since eurozone uncertainty picked up over the last week CHF has been supported against the EUR. However, SNB board members have warned that it will still contemplate other measures to offset increased swissy inflows and maintain the cap at 1.2000.[USD, CAD]
USD-CAD moved up over 1.0190 into the North American open, on the back of shaky risking taking sentiment. European and U.S. equities were softer, while oil prices gave back some of Tuesday's gains. Initially, USD-CAD resistance is seen into the 1.0200 region, but stops will be a factor over 1.0220. USD-CAD took a moderate dive after the hotter Canadian CPI outcome, falling to 1.0150 from near 1.0180. The data changed the CAD tone for now, though dealers looked to Wall Street, where equities stayed weak. Overall, softening risk taking levels put something of a floor under USD-CAD, which rebounded back over 1.0175 in afternoon trade.